Insights

Free thinking from Grayling people

Grayling Brussels' Brexit Bulletin - 10 February 2017

The Grayling view: MPs waste opportunity to hold Government to account

The good ship Brexit continues to sail unopposed towards its destination, most likely a "hard Brexit", namely one that leaves the UK purposefully outside both the Single Market and the Customs Union.

This week MPs in Westminster allowed the ship to sail past without making any changes to its passage. All amendments to the "Article 50 bill" were rejected, with a large proportion of Labour MPs - though by no means all - supporting the Government.

Did Theresa May think it would be this easy?

Surely not, and yet there has been no opposition from Labour when it comes to the Brexit Bill, no attempt to hold the government to account in these critical early stages.

There is a suggestion that MPs will get tough at a later stage, but by then it will be too late, the EU will be involved, and the hugely complex negotiations will be long underway.

In the end, Parliament will get a vote on the final deal, but it will be a "take it or leave it" vote, with the "leave it" option consigning the UK to WTO rules and without any formal agreement with the rest of the EU.

MPs have no power to send the agreement back to the drawing board, since the time is limited, and political will on the other side of the Channel is diminishing by the day.

This was MPs' one chance to exercise their democratic voice - they have missed this opportunity.

If you have any suggestions about the Brexit Bulletin or want to find out more about a specific aspect of Brexit, please do let us know. Please visit the Grayling Brussels website and follow us on Twitter @TheEULobby.

Brexit cocktail in Brussels!

Not bored of Brexit yet? Nor are we!

On 30 March the Grayling Brexit Unit (GBU) is hosting a Brexit Cocktail from 6.30pm at our offices, Avenue des Arts 46, Brussels.

We want to highlight how business can approach Brexit as an exercise in damage limitation and make the most out of a difficult situation.

The event will bring together major businesses, EU/UK decision-makers, and leading academics to discuss how we can understand, approach and shape what Brexit means for the future EU-UK trade dynamic.

Government victorious as Brexit Bill exits the CommonsOn 9 February, the UK Parliament held its third and final vote on the Brexit Bill, giving Theresa May permission to trigger Article 50 with 494 for and 122 against.

Theresa May comfortably saw off off an attempt by the Labour Party to ensure that Parliament gets an effective veto over any final Brexit deal. By a majority of 33, MPs voted against an amendment proposed by the Labour MP Chris Leslie that would have stopped ministers striking a Brexit agreement until it had been passed by MPs and peers. MPs who supported the amendment will now have to content themselves with the ‘take-it-or-leave-it’ vote initially offered by the Government - meaning that if they reject the deal, the UK will likely leave the EU without any agreement and default to WTO rules.

The Bill will now pass to the House of Lords, where Labour and Liberal Democrat peers will seek concessions from the government on issues including the status of European Union citizens living in the UK. Either way, expect the House of Lords to finalise their position in early March, thereby allowing Ms May to trigger Article 50 during the EU Summit on 9-10 March.

The Grayling viewAlthough Theresa May is on track to meet her self-imposed deadline of triggering Article 50 – and starting the formal process to quit the EU – by the end of March, the lack of any meaningful vote on what the PM negotiates in Brussels is worrying for business. This is because the absence of a Parliamentary veto capable of sending May back to the negotiation table gives the Executive a free hand in the negotiations and no real incentive to go back to Parliament during the negotiation process. It is therefore now more likely than ever that the UK will leave both the Single Market and the Customs Union, with MPs having minimal say. Whilst the House of Lord's could still theoretically halt the process, they are expected to bow to political and popular pressure and adopt the legislation without submitting any amendments, leaving a clear passage for May to trigger Article 50 possibly during the March EU Summit on 9-10 March.

UK overseas territories lay out their priorities Representatives of 10 UK overseas territories have laid out their priorities for Brexit, which includes continued EU development funds, quota and tariff-free fish exports, and the right for their citizens to travel freely to the EU. Some, notably the British Virgin Islands, also want to protect their current status with regard to financial regulation.

These overseas territories are not part of the EU (except for Gibraltar and sovereign areas on Cyprus), were unable to vote in the referendum, and have a combined population of just 250,000 - less than the EU's smallest country, Malta.

They include Anguilla; Bermuda; British Virgin Islands; the Cayman Islands; the Falkland Islands; Montserrat; the Pitcairn Islands; St Helena and Ascension Island; Tristan da Cunha; and the Turks and Caicos Islands.

The Grayling viewAlthough Ms May has said she will take the interests of all the UK and its territories into account, it is difficult to see how such small populations can be given any guarantees when it comes to their own priorities. They are in the unenviable position of being largely powerless in the negotiations. If even Scotland cannot change the Government's course on Brexit, then there is little chance of these overseas territories having any say.

Speaker says Trump should not address MPsThe Speaker of the House of Commons, John Bercow, this week caused a furore by saying that Donald Trump should not be allowed to address the UK Parliament. He said "our(MPs') opposition to racism and to sexism and our support for equality before the law and an independent judiciary are hugely important considerations in the House of Commons." The comments follow Theresa May's visit to Mr Trump last week and her invitation to the US President to make a state visit to the UK later in the year. More than 160 opposition MPs also signed up to the motion to prevent Trump from speaking in the Parliament.

The Grayling viewWhilst Mr Bercow's comments are perhaps understandable to many, the reality is that - post-Brexit - the UK needs a strong relationship with the US, not to mention a trade deal. Upsetting Mr Trump in advance is not the best way to go about this. The UK will soon be ploughing a lone furrow in international affairs, without the support of the EU, and it will need to rely on its own diplomatic endaevours to curry favour with the world's major economies. There will be a price to pay for all this, which probably includes letting Mr Trump address MPs...

The highlights from Brussels

French duo will make the UK settle its bill before trade talks startOn 6 February, French Prime Minister Bernard Cazeneuve said that the UK must settle its Brexit divorce bill before trade talks begin. Cazeneuve added that any eventual deal must not give Britain better terms than it would have if it stayed a member of the EU. In parallel, on 9 February, the European Commission’s chief negotiator for Brexit, Michel Barnier, said that the EU wants to agree with Britain a formula for calculating how much it will owe the EU after it leaves.

The principle variable in calculating the Bill would be Britain’s share of all EU assets and liabilities at the moment of leaving the EU, but this figure is not yet known and percentage point variation can have dramatic effects. In the words of a Commission official, "It could be 12, 13, 14 or 15 percent, or something else. And we need an exact figure because one percentage point is several billion euros."

The Grayling viewThe Commission is fully aware that trade is the key issue in Brexit negotiations. Making the UK wait before trade discussions open will probably ensure that the UK pays the eventual sum without many qualms.

News from the rest of Europe

Irish Prime Minister seeks to persuade rest of EU to go easy on UKIreland - the only EU Member State with a land border with the UK - is launching a flurry of diplomatic activity across the EU to make other countries aware of its unique circumstances when it comes to Brexit. The Irish Prime Minister Enda Kenny is in talks with countries in Central & Eastern Europe to make them aware of how Ireland will be affected following Brexit. In particular, there is the real possibility of a "hard border" between the UK and Ireland, which is currently unmanned and over which people and goods can cross freely. In the background is the recent turbulent history in Northern Ireland, with many fearing that a "hard border" could rekindle the troubles which badly affected the region from the 1960s until the Good Friday Agreement in 1998.

The Grayling viewIreland has a difficult job on its hands - whilst the mood in many EU capitals is one of vengeance, Dublin cannot afford for there to be a deal which punishes the UK or makes it harder for the EU to trade with it. This is why Mr Kenny is pushing other countries to preserve good relations with the UK and ensure that there is no hard border between the Republic and Northern Ireland. Will he succeed? Possibly. A dose of realism may not go amiss, but Ireland is still a small country within the EU, and lacks the much needed clout that could persuade the likes of France and Germany to go easy on the UK.

Czech Minister criticises May's "alternative facts"The Czech Minister for European Affairs Tomáš Prouza has warned that Theresa May's use of “alternative facts” about immigration could jeopardise the Brexit negotiations and future UK-EU relations. Prouza also lamented that London was not clearly setting out the kind of relationship the UK wants to have with the EU, referring to the Prime Minister’s speech where she set out her 12-point Brexit plan, with the White Paper adding little clarity. It was described by the Czech secretary as a “nicely written 70 pages with very few tangible details and aimed at the domestic audience”.Prouza also voiced his hopes for a cordial breakup and a close, forward-looking relationship with Britain, citing the breakup of Czechoslovakia as an example of a clean divorce.

On future UK–EU relations, Prouza said his government would have liked to see the UK’s continued participation in the Single Market with all four freedoms of movement of goods, services, people, and capital applied, but he realised this was not going to happen. Still, Prouza welcomed the fact that there was a lot the EU and the UK could still agree on, including common defence projects, defending common values, the importance of NATO, and working together to fight terrorism, organised crime, and cyber threats. He also said he hoped the UK and the EU could continue to cooperate on research.

The Grayling viewMr Prouza's comments reflect many views across the continent. Realistic, yet optimistic of reaching an agreement which benefits both parties.

News from our Asian Network

Chinese Ambassador: Chinese companies need to take "precautions" The Chinese Ambassador to the UK Liu Xiaoming has said that Chinese companies, especially those operating in the financial sector, need to take "precautions" given the lack of certainty over Brexit. However he did not expand on these comments, but added that China is hoping for an early agreement within the Brexit negotiations.

The Grayling viewIt may not say this in public, but China is dismayed by Brexit, not least because the UK is seen as a bastion of free trade within the EU. With the UK gone, it leaves France and Germany to run the show, which is not always in China's best interests. The Ambassador's remarks merely reflect the fact that Brexit is still an uncertain process, and one which will have significant ramifications for both the UK and the EU.

Our Grayling Brexit Unit brings together the very best consultants from across the Grayling network and includes those who have direct experience of working alongside the leading political figures charged with negotiating Brexit in London and Brussels.

The Grayling Brexit Unit is here to support, guide and inform the success of your business and identify how the political dynamics will change as a result of Brexit in both London and Brussels. We are your Brexit experts.

No task is too big, too complex, or too ambitious - please contact Robert Francis (robert.francis@grayling.com) in our Brussels team or Jonathan Curtis (Jonathan.Curtis@grayling.com) in London for more information, and check out our brochure.

Robert Francis

Latest Insights

15th November 2016

Is This Real Time?

Will Kunkel, Executive Vice President for Creative and Content in Grayling New York, on the final of our #7for17 trends, Live and Uncut‘Timing is everything’ has been a favorite line to many but...